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Author: dlcasey Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Contrafund? Date: 10/13/1998 9:51 PM
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I currenty have a SEP IRA funded by my employer. I have about 15 K in it now (was quite a bit more just a few months ago, harumph!) and it is all in Fidelity's Contrafund, which was sort of the "designated" fund when this thing was opened...why, I don't know, but it looks like historically at least not a bad fund, except for an apparent tailing off in my opinion over the last few years.

My question is whether I should do the Foolish thing and move my funds into Fidelity's version of the S&P Index fund (Spartan Market fund FSMKX) or what? This SEP is managed by Fidelity, and I don't have enough balance to have it as a brokerage account yet so I'm stuck with selecting Fidelity family funds for the moment...any other advice?

Thanks,

dlc
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Author: zgriner Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6011 of 74759
Subject: Re: Contrafund? Date: 10/14/1998 9:36 PM
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The real question is: Do you want to try to choose a fund that will beat the market or are you willing to go along for the ride? Remember, there is an 80% chance that you will choose wrong (although I don't know what the chances are for the Fidelity funds, specifically).

I just looked at the funds. The Spartan Market Index fund has a 5 year return of 19.56% and Contrafund's return is 15.9%. There is no load on the Spartan fund and a possible 3% load on the Contrafund. The expense ratio for the Spartan fund is .19 while the ratio is .67 for the Contrafund.

I think the above facts should make your decision simple.

Zev

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Author: Tiddman Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6016 of 74759
Subject: Re: Contrafund? Date: 10/15/1998 8:35 AM
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> The real question is: Do you want to try to choose a
> fund that will beat the market or are you willing
> to go along for the ride? Remember, there is an 80%
> chance that you will choose wrong (although I
> don't know what the chances are for the Fidelity
> funds, specifically).

I think this is an oversimplification. It is true that 80% or more of the funds have underperformed the market over the past 5-10 years. But if you pick a fund that HAS beat the market over the past 10 years, do you have an 80% chance of underperforming the market? I don't think so.

Also the stock market has been breaking every record in the book for the past 5 years, so judging all the mutual funds based on the last 5 years may not be valid. Past performance, as they say, is no guarantee of future results.

Tiddman


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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6046 of 74759
Subject: Re: Contrafund? Date: 10/16/1998 2:18 PM
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Greetings, Dlc, and welcome. You asked:

I currenty have a SEP IRA funded by my employer. I have about 15 K in it now (was quite a bit more just a few months ago, harumph!) and it is all in Fidelity's Contrafund, which was sort of the "designated" fund when this thing was opened...why, I don't know, but it looks like historically at least not a bad fund, except for an apparent tailing off in my opinion over the last few years.

My question is whether I should do the Foolish thing and move my funds into Fidelity's version of the S&P Index fund (Spartan Market fund FSMKX) or what? This SEP is managed by Fidelity, and I don't have enough balance to have it as a brokerage account yet so I'm stuck with selecting Fidelity family funds for the moment...any other advice?


Where you put your money is obviously your choice. And it's true that over the past five years the Contrafund has trailed the S&P 500 Index and the Spartan Market Index fund. But then the latter has also trailed the Vanguard 500 Portfolio. If you are more comfortable using an index fund (and they do beat most managed funds over the long haul), then you should use one. But don't think you're restricted to Fidelity's just because your SEP is with that family. A SEP is just like any other IRA, which means you are free to transfer that IRA to another provider whenever you like. Therefore, there is absolutely nothing to stop you from moving those monies to Vanguard if you choose to do so. Nor is there anything to prevent you from moving them to a self-directed IRA at the broker of your choice should you want to do that. With $15K, you certainly have enough cash to trade on your own, and most Fools believe we can do better than even the index funds over the long-term. IMHO, your options are wide open to do whatever you want with those funds. If, though, you are in a SAR-SEP

Regards….Pixy


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